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loaders, you definatly know more than me. can you send me link to FMCSA site that says canadian broker (i have no us office)? thank you.
Compliance with US Rules for Load Brokers
- Thread starter loaders
- Start date
We landed a customer this year because of this bond, a load a day type of account. It's insurance for all to get paid in case we don't pay up, plus our bond is $250,000 instead of $75,000 so that helps too!
Plus the cost is minimal for the return we get out of it.
Plus the cost is minimal for the return we get out of it.
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There will be no statement on the FMCSA website that says "Canadian brokers must be registered'. Canadian brokers have to realize that the US doesn't differentiate between which side of the border you operate from. If you engage in arranging for the transportation of other peoples goods and that transportation, or part of that transportation, involves travel within the US, technically, you must be registered. It doesn't matter if you have a US office or not, nor is it dependant on whether you employ US or Canadian carriers. Think of it like a fishing licence. You have an Ontario fishing licence, but if you want to fish for some big Florida largemouth bass, you better be sure to have a Florida fishing licence with you. When you want to play, or conduct business in someone else's backyard, you have to play by their rules. MikeJR, I have to say I'm somewhat surprised that you are questioning the legal requirement. I believe you attended the meeting where the US transportation lawyer
discussed this issue at length. I can sympathize and appreciate that there are additional costs associated with becoming compliant, however the question of whether or not a Canadian broker engaging in US commerce is somehow exempt from this regulation, has been answered, and as GRoch mentioned, don't be surprised if enforcement of the regulations is very far away.
discussed this issue at length. I can sympathize and appreciate that there are additional costs associated with becoming compliant, however the question of whether or not a Canadian broker engaging in US commerce is somehow exempt from this regulation, has been answered, and as GRoch mentioned, don't be surprised if enforcement of the regulations is very far away.
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G Roch - that's awesome news! Like I said, it's a great sales tool. Your customer (and supplier) confidence is greatly increased especially as you went over and above the basic requirement.
loaders - I attended the meeting absolutely and have always rather enjoyed the learning experiences from all NTBA meetings.
freightfwd - My advice - you should speak to a Canadian transportation lawyer to get a more clear answer. Please post the results here once you have!
Keep well,
Mike
loaders - I attended the meeting absolutely and have always rather enjoyed the learning experiences from all NTBA meetings.
freightfwd - My advice - you should speak to a Canadian transportation lawyer to get a more clear answer. Please post the results here once you have!
Keep well,
Mike
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Technically a Canadian broker, arranging for the transportation of freight in and out of the United States, has to have an MC number, and to get that number, they need to have a bond. That's in the FMCSA rules.
However, practically speaking, why would a Canadian broker bother? The rule is unenforceable. Even if the U.S. could find out that a Canadian broker is involved, and went so far as to levy a fine on the Canadian broker, how could they collect it? It's not like the brokerage itself travels back and forth across the border.
However, practically speaking, why would a Canadian broker bother? The rule is unenforceable. Even if the U.S. could find out that a Canadian broker is involved, and went so far as to levy a fine on the Canadian broker, how could they collect it? It's not like the brokerage itself travels back and forth across the border.
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What if I want my $35 Grey Goose?
All joking aside, good point Michael. It's what I was getting at with my headlight analogy (unenforceable jurisdiction) but you just spelled it out much more clearly!
Keep well,
Mike
All joking aside, good point Michael. It's what I was getting at with my headlight analogy (unenforceable jurisdiction) but you just spelled it out much more clearly!
Keep well,
Mike
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There is no question about the wording, nor the FMCSA meaning of the regulations. Agreed, enforcement, if and when it comes will be difficult. However, there are rumblings within the US brokerage industry, spearheaded by the TIA, that every broker, Canadian or US, should play by the same rules. It all boils down to the "level playing field" concept. If we are all participating in the same industry, doing the same type of business, why should one segment be obliged to adhere to a set of rules and the other segment not? Don't forget, it was the TIA that initiated the request for adoption of the 75K surety bond as a requirement of licencing. They received a great deal of resistance from their own members who felt that the amount was too large and would be too burdensome on their business. However, with the support of the American Trucking Association, and the larger TIA members, they were successful in having this regulation enacted into law. American business, and by extension, their government, support the concept of equal treatment in the marketplace and they have been known in the past to look seriously at foreign firms that are perceived to have a "competitive" advantage over US based companies. My firm is compliant with current FMCSA regulations, and I find it regrettable and unfortunate that I compete with other Canadian brokers who are not.
Customers and carriers who are educated on this subject will most likely look for a broker who has a bond so they can be protected.
Plus on top of that if anything goes wrong once you broker that load, you become fully liable since you are deliberately not following the rules of the industry.
Check the information regarding MAP-21;
http://www.trucklawblog.com/map-21s-new-broker-requirements-will-affect-carrier-operations/
http://www.fmcsa.dot.gov/mission/policy/map-21-moving-ahead-progress-21st-century-act
Plus on top of that if anything goes wrong once you broker that load, you become fully liable since you are deliberately not following the rules of the industry.
Check the information regarding MAP-21;
http://www.trucklawblog.com/map-21s-new-broker-requirements-will-affect-carrier-operations/
http://www.fmcsa.dot.gov/mission/policy/map-21-moving-ahead-progress-21st-century-act
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It doesn't say on your passport who you work for, so you should be okay ... LOL
Frankly, I don't even see why a U.S. broker would bother. There's no official paperwork linking a load broker, from any country, to the transaction. A bill of lading details the shipper, carrier, and receiver. Customs paperwork details the shipper, seller, buyer, consignee, and customs broker. Unless a broker is careless enough to insist that a shipper puts "XYZ Load Brokers" in the carrier section of the bill of lading, how would anyone official ever know a load broker is involved?
The only possible ways I could see a brokerage getting fingered would 1) They are also a carrier and get picked up for it in an audit, 2) The IRS drops a dime on them to the FMCSA, or 3) their carrier is involved in a fatal accident. Other than that, if you are not domiciled in the U.S., I would suggest it is highly unlikely you would ever be found out.
Probably a more important question than "Do you have a bond?", is "Do you maintain a trust fund?". Really, in the grand scheme of things what is the 75K bond really worth when the broker you are dealing with does $1 Mill a month? If he goes belly up, you're not likely to collect too much .. a penny or two on the dollar at best. In theory, if a trust fund is maintained, your money should be there.
@loaders ... welcome to the carrier's world we compete against fly-by-night carriers skirting the rules all day long.
@G Roch ... how does a broker's bond protect your customer? It doesn't.
Before I begin to get a lot of flak ... let me make one point clear ... I am all for the level playing field and everyone playing by the same set of rules.
Frankly, I don't even see why a U.S. broker would bother. There's no official paperwork linking a load broker, from any country, to the transaction. A bill of lading details the shipper, carrier, and receiver. Customs paperwork details the shipper, seller, buyer, consignee, and customs broker. Unless a broker is careless enough to insist that a shipper puts "XYZ Load Brokers" in the carrier section of the bill of lading, how would anyone official ever know a load broker is involved?
The only possible ways I could see a brokerage getting fingered would 1) They are also a carrier and get picked up for it in an audit, 2) The IRS drops a dime on them to the FMCSA, or 3) their carrier is involved in a fatal accident. Other than that, if you are not domiciled in the U.S., I would suggest it is highly unlikely you would ever be found out.
Probably a more important question than "Do you have a bond?", is "Do you maintain a trust fund?". Really, in the grand scheme of things what is the 75K bond really worth when the broker you are dealing with does $1 Mill a month? If he goes belly up, you're not likely to collect too much .. a penny or two on the dollar at best. In theory, if a trust fund is maintained, your money should be there.
@loaders ... welcome to the carrier's world
we compete against fly-by-night carriers skirting the rules all day long.@G Roch ... how does a broker's bond protect your customer? It doesn't.
Before I begin to get a lot of flak ... let me make one point clear ... I am all for the level playing field and everyone playing by the same set of rules.
Actually, I believe the OOIDA wanted a $500,000 bond and then TIA was able to negotiate that down to $100,000. After a few tilts with Washington it was decided that the $75,000 requirement was best so it could match up with another requirement from the Forwarder industry.
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I find this thread interesting. I'm not overly familiar with this bond requirement but when you start using terms like "compliant" when stating this surety bond is required - you're insinuating an actual "entity" is verifying, regulating and recognizing the compliancy. I think that is what MikeJr and a couple other members are getting at when questioning the necessary validity of the bond.
Who exactly is ensuring and enforcing this "required" surety bond standard?
It would seem that in the new language it allows recourse for Carriers, Brokers, and Customers.
So if the Customer is being asked to double pay an invoice by the actual carrier that hauled the load they can turn to the Bond for payment.
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You are correct about the trust fund Michael. You will find even fewer brokers that don't adhere to that Highway Traffic Act regulation. I am not naïve enough to think that every broker would play by the rules, nor every carrier that sells off freight they can't cover without a proper broker's licence. The situation in the US is different. I would be very surprised if there are many US carriers accepting freight from unlicensed US freight brokers. Although 75K isn't much, it is better than $0.00. Call me old fashioned if you want, but in my mind, playing by the rules and maintaining required licensing indicates that you're serious about what you're doing, not only to your customers, but to your suppliers as well.
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AccountsReceivable@DRC. The surety bond is a requirement in obtaining a Property Brokers Licence with the FMCSA. If you want, or decide to be a "compliant" broker within the eyes of the FMCSA, whether you operate in Canada or the US, you file the surety bond with FMCSA. Just as carriers do with their vehicle and cargo insurance. The FMCSA is the entity that "verifies" you are compliant. You can obtain a company snapshot on the Safer website about a carrier, you can also do the same for a compliant, or registered broker.
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I think it is also important to point out that in order to get a $75,000 you need to produce financials to the bond company. If you are not "financially stable" the cost of your bond goes up or you can simply not get one. As we all know, it is extremely important for shippers to ensure that the brokers they are dealing with are financially stable and this is a good way of verifying so.
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Also for carriers to know that the broker they will be indebted to is financially stable. Listen, if a broker doesn't want to spend the money to get the bond.....fine. Or if you make the business decision to not get licenced because you don't think there is any chance you will be caught, that's your call. But let's not muddy the discussion by claiming that rules somehow don't apply to you because you are a Canadian. The simple truth is, by definition of your activities, they do, regardless of what country you're in.
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In some cases the bond is not required, even in the US. The bond is specific to truck shipments, so if you're shipping by rail or air or ship the bond is not required. Furthermore, the bond is only required for "regulated freight" that moves across state lines, i.e not raw product like produce (used be called exempt commodities years ago) or shipments moving intra state.
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We're a very small brokerage with no physical assets to use to show to the bonding company so getting the bond was rather tough. We tried to investigate to see if it was even actually needed for the longest time when they first put the $75k into place and didn't find anything that said we needed it but we got it as a precaution mostly. There may not be any easily attainable information on it but have fun trying to book a US carrier without having that bond/MC#.